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FHA Streamline Refinance In 1937, under an act of Congress, the Federal Housing Administration was established to provide American families with a unique opportunity to become home owners. Formerly, a home buyer's options were only limited to short term loans ranging from 1 to 5 years in term. Borrowers had to put as much as 40 to 50 percent down on the property and pay off the entire loan balance by the end of the term. FHA revolutionized the mortgage industry at the time by offering the 30 year mortgage and made the possibility of home ownership available to Americans nationwide. Throughout the years, a variety of programs have spawned from this revolution to make home ownership easier, more affordable, and attainable to Americans.

Though HUD is not a direct lender, it is the Department's responsibility to maintain an ongoing program designed to monitor the overall quality of loans originated from HUD approved lenders. HUD is an insurer of loans, protecting lenders against potential losses suffered from default and foreclosure. The "mortgage insurance premium" collected from the borrower on each loan helps defray costs associated with this program.

FHA, also known as the Federal Housing Administration, operates under the control of the Department of Housing and Urban Development (HUD) and has the primary responsibility for administering the government home loan insurance program. This program allows buyers who might otherwise not qualify for a home loan to obtain one because the risk is removed from the lender by FHA.

The most popular FHA home loan program nationwide is the 203(b) FHA home loan (see below) that only requires a minimum of 3% from the borrower and permits 100% of their money needed to close to be a gift from a relative, non-profit organization, or government agency.

We have a variety of home loan programs that offer mortgage options that allow you to select a loan to meet your individual needs, including:

  • Competitive Interest rates
  • Fixed Simple Interest Mortgages
  • Home Improvement Loans
  • Credit Card Consolidation
  • Cash Out Refinance loan
  • 125% Home Equity Loan
  • VA/ FHA Home Loans

 

The main advantage to a FHA home loan is that the credit criteria for a borrower are not as strict as FNMA or FHLMC. Someone who may have had a few credit problems should not have a problem obtaining FHA financing. Also, FHA home loans are assumable, allowing a person to take over the mortgage without the additional cost of obtaining a new loan. In addition, the seller must pay for part of the "traditional" closing costs (called non-allowable costs) while a borrower's allowable costs can partially be wrapped into the loan. 100% of the down payment and closing costs can be gifted.

The greatest disadvantage of FHA home loans is the upfront mortgage insurance premium (MIP). On a 30 year FHA home loan that equals to 2.25% of the loan amount (2% for a 15 year) in addition to the 0.5% annual renewal premium that a borrower will pay for the life of the loan. In addition, FHA limits the amount a borrower can borrower.